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Government asks Rain to withdraw proposed merger with Telkom

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JOHANNESBURG — A government body has censured data network provider Rain for proposing a merger proposal with its biggest rival Telkom SA, saying the company had not sought prior approval.

Rain, owned by South African billionaire Patrice Motsepe, said on Thursday it had proposed a merger with Telkom in a bid to deceive mobile phone company MTN’s plans to acquire Telkom.

The country’s Takeover Regulation Panel (TRP), a government agency, said the ad was posted by Rain without the prior approval required by regulations.

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“Rain’s posting of the ad is illegal, and Rain has been instructed to remove the ad,” he said.

“In these circumstances, all parties (i.e. shareholders) and the market are urged to disregard the announcement.”

Last month, the country’s second-largest telecommunications company, MTN, said it was in talks with Telkom in an all-share or cash-and-stock deal that could create the country’s largest telecommunications company. of the country surpassing the biggest rival Vodacom Group.

Analysts had said the acquisition was unlikely to succeed with the Competition Commission because it would create a virtual duopoly in the country.

Rain said his proposed merger with Telkom would create a more competitive landscape and three big telecom players.

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“It is a logical alternative to simply selling to MTN and would also be in line with the government’s pro-competitive policies,” Rain said in a statement.

Telkom shares rose more than 6% at 2:10 p.m. GMT after the announcement, but it said in a separate statement that it had not received any offers from Rain.

Mostsepe manages a diverse business network that ranges from mining, financial services, telecommunications, renewable energy to investments in start-up companies through Africa Rainbow Capital (ARC) Investments.

Rain, which offers 4G and 5G data services, has been one of its fastest growing companies in the portfolio and claims to have one of the largest 5G networks in the world covering more than 6 million homes. (Reporting by Promit Mukherjee in Johannesburg, Bhargav Acharya in Bengaluru; Editing by Kirsten Donovan and David Evans)

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